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Economics · May / June 2022 · Paper 12 · Question 22

2281Inflation

A country wishes to reduce the level of inflation. Which combination of policy measures will be most successful?

  1. Adecrease exchange rates; increase interest rates
  2. Bdecrease interest rates; increase exchange rates
  3. Cincrease government spending; decrease interest rates
  4. Dincrease interest rates; decrease government spending

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Correct answer: D. increase interest rates; decrease government spending

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